How YouTube Kicked Google's Ass (and everyone else's too)

YouTube launched last summer and is now the 23rd most trafficked site on the Internet (according to Alexa).  Comscore Media Metrix has a slightly different picture, ranking YouTube as the 89th most trafficked site with  276 million page views in April.

To give you some sense of the growth of YouTube, it didn’t even make
the August Media Metrix report, had 1 million page views in September,
and only 50 million page views in December. It has grown five fold in four months.

YouTube has captured the leadership position for video on the Internet and that’s an incredibly valuable place to sit.

I am taking a bit of a leap in saying that YouTube is the leader in Internet video.  I saw this chart in USA Today in mid-April:

MSN video 9.3M visitors, 44% change
YouTube 9.0M visitors, N/A change
Google Video 6.3M visitors, N/A change
IFilm 4.3M visitors, 102% change 3.8M visitors, 148% change
Source: Nielsen/NetRatings

But I suspect YouTube is the king now and I’ll tell you why they got there so quickly and why Google blew an opportunity to be the king of Internet video. It’s also a very important story in an era when people are starting to think that the top online properties are untouchable. That is very far from the truth, MySpace, YouTube, and Wikipedia have all gone from nowhere to top 30 status in the past three years.

YouTube wasn’t the first Internet video sharing service, that claim goes to Vimeo which launched at the beginning of 2005.

And YouTube didn’t beat Google to the market.  Google Video launched in beta in June of 2005.

YouTube wasn’t first and they didn’t beat the big guys to market. But they did do three things, that in combination secured them a leadership position that to me looks pretty unassailable.

First they launched with a really slick flash player that almost everyone else has now copied. They bet on flash and they were right.  For video playback on the web, flash is the way to go.

Second, they provided immediate playback. When Google Video launched, I uploaded a video and had to wait for days to see it playback.  Needless to say, I’ve never uploaded another video to Google.

Third, and this is the biggie, they provided an easy way to embed their flash player and a specific video in another web page. This too has been copied by most everyone in the online video business. But if you go back and look at YouTube’s traffic, the day they let people embed their videos in MySpace pages is the day they took off and never looked back.

One of my favorite blog posts is this one by Ari Paparo describing how two or three minor features was the difference between the failure of Blink and the success of delicious.

Little features, often the social ones, make all the difference in web delivered services. YouTube got it right.  Google and everyone else didn’t.  And the result is YouTube’s market leadership.

Many people will read this and say that this is all bull and the real reason YouTube is the leader is their reliance on pirated video and that they are headed for a fall now that the owners of that content are getting wise to the illegal use.

To that I’d say yes and no. It is true that YouTube lets anything go up and only takes it down when they get a request. But they do take it down.  See my post on the Stephen Colbert video yesterday for a good example of that.

There are several reasons why YouTube won’t follow the path of Napster. First, users will keep uploading video that they want to share to YouTube because its easy and at least for a while their friends and others will be able to see it before it gets taken down. The users are the "bad guys" and YouTube gets to play by the rules. And second, because the content owners are going to get wise to the fact that this sharing actually helps them. And third, content owners are going to figure out how to monetize this video by claiming the video, swapping out their video for the "pirated one", and putting a pre-roll or watermark advertisement into it.

But the bottom line is that YouTube has captured the hearts and minds of the Internet audience. They are "the place" to upload video and to go see video. They are the good guys.  When a content owner takes down video, the people cry foul.  They love YouTube and they get mad at the content owners.

Google doesn’t have that reputation in online video, Yahoo doesn’t have that reputation in online video, Microsoft doesn’t have that reputationn in online video.

YouTube does and that’s why they are the king. And they got there by making a few key design decisions last summer. And the rest is history.

#VC & Technology